The Rwandan government has found a buyer for Burera Dairy Limited which was floated into the market in September last year.
The government held 98.03 percent stake in the firm which was established in 2016 at a cost of Rwf488 million (US$528 000) to boost dairy farming in the area.
Government stake was last week sold to African Solutions Private Ltd (Afrisol), a Zimbabwean firm which has been investing in the country over the past two years.
Sources say that the firm was sold at around Rwf 270 million.
None of the parties involved agreed to disclose the figure.
The facility was handed over to its new owners on January 14.
The new owners say they intend to boost the milk-processing industry and buy milk from farmers, train them on best practices, as well as work with farmers in availing animal feeds to boost productivity in both quality and quantity.
National Industrial Research and Development Agency (NIRDA) Public Relations and Communications Specialist, Jean d’Amour Mbonyinshuti, told Business Times that during the handover, the firm committed to investing about Rwf1.6 billion over the next five years to turn around operations.
Afrisol already has a presence in Rwanda based in Rwamagana Industrial Park and has been involved in animal feed production and technical farmer support and training. The firm said the services and products will be extended to farmers in Burera District.
Afrisol Chief Executive, Ruvimbo Chikwava, told Business Times that they are aware that some farmers in Burera District have reduced involvement in dairy production following the closure of the facility.
He said that going forward, they will be involved in training farmers on aspects such as the best ways to take care of their cows, best ways to milk and handle milk among other ways.
Considering that they already have investments in animal feed production, he said they will avail feeds to farmers upfront to increase the productivity and quality of their produce.
With six milk collection centres in the area, the firm said they will prioritise produce from the area before buying from other parts of the country.
Operations are expected to begin next month with some products expected to hit the market thereafter. More products are expected to debut the market over time. The firm’s products will be traded under the Burera Dairy brand name.
He said between Rwf1 billion and Rwf2 billion, which will be invested over the next five years go into improving the capacity of the plant, repairing and revamping the plant, establishing new product lines, working capital as well as ensuring prompt payments to farmers.
The acquisition is a huge relief to farmers in the area as the firm has been marred by various challenges, which have led to the halting of operations, hurting the fortunes of dairy farmers in the region.
Last year, during a visit by President Paul Kagame to Burera District, officials from NIRDA, Rwanda Development Board and the Business Development Fund (BDF) were at pains to explain why operations had stalled.
Among the challenges that emerged during the interaction was that the firm was grappling with mismanagement.
Claire Mukeshimana, the acting Director-General of NIRDA, said the government’s expectations are that the company will boost the milk processing industry and create more jobs.
“We expect that the new company will boost milk processing industry, create more jobs for locals as well as improving smallholder farmers’ lives as it will be buying milk production at a better price,” she said.
She said the move to privatise the facility is aimed at improving efficiency and productivity.
“Multiple firms expressed interest, only two were shortlisted. Afrisol has committed to operationalise the dairy, support milk collection centres, develop technical skills among its employees as well as the farmers that will be supplying milk to the factory,”
“In addition to the purchase price which is under confidentiality, Afrisol has committed to invest more than Rwf1.5 billion in capital investments to expand the dairy over the next five years.
“The investor has also committed to supporting farmers by providing quality animal feed to increase the production of raw milk in the region, this will help farmers increase their revenues,” said Doreen Karake, Transactions Structuring and Support (TSS) Division Manager at the Rwanda Development Board
Burera Dairy Ltd was one of three public firms, all in agribusiness, put up for sale by the government in 2019 alongside Nyabihu Potato Company and Rutsiro Honey Ltd. — (US$1 = 924 Rwandan franc) — New Times.